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Critics of our campaign finance system fear growing corruption: are contributions too often the quid pro quo for favorable government regulation or no-bid contracts?

New economics research using stock prices finds that political ties can be quite profitable for U.S. firms. The idea is simple: compare companies that cultivate ties with Democrats (through campaign contributions or board memberships or lobbying) to the firms that give to or hire Republicans. Once election results are in, the stock price movements of these two groups of firms reveal the market value of their political allegiances.